How To Know if a Rental Is a Good Investment

How To Know if a Rental Is a Good Investment   Two calculations to determine if a rental property is a good investment. Have you ever thought about investing in a rental property? Real estate investments can be a great way to earn passive income, but you need to be careful. Not all rentals are the same, so you need to know how to identify which ones make sense financially. That can change based on various factors, but the main way to determine if an investment will be a good one is to run the numbers. Whether or not you like math, that step is crucial to finding an excellent real estate investment. However, this is challenging and daunting for many people, so I’m here to simplify it for you.  The first thing you should do is figure out how much your rental income, operating expenses, and mortgage payment would be. There are many calculators online that will help you take a mortgage price and turn that into what your monthly payment would be, and you can talk to a local lender for advice on that. Then you can look at comparables in your area to see how much you should charge for rent, which would be your rental income.  “The main way to determine if an investment will be a good one is to run the numbers.” The trickier part of this is determining what your operating expenses would be. Of course, it’s always possible for unexpected things to pop up, but here is a list of some common expenses: accounting for a vacancy, the fees of a property management company if you want one, leasing fees, repairs, insurance, taxes, utilities, etc. You’ll have to estimate what some of those numbers will be, but there are experts that can help you with this.  This is where the math comes in. I recommend you calculate what your net operating income and cash flow would be. For the first equation, simply subtract your expenses from your rental income, and that’s your net income! Then, take that number and deduct your mortgage payment, and that leaves your cash flow. It’s as easy as that! Plus, there are plenty of online calculators that can help you with all of this.  There are a lot of other calculations you could run, but those are the essential ones. If those two don’t end in a positive number, run away! That property is not the right investment. This topic entails a lot of subjective and confusing things, so I recommend getting advice from an expert, and I would love to help you. If you want my help buying an investment property or even seeing if the investment would be worth it, call or email me! I would be happy to walk you through every step of this process.   Written by Ruby Miranda on March 15, 2023. Posted in InvestingTags: investing, rentals Trackback from your site. Leave a Reply  

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A Seller’s Guide to Appraisals

A Seller’s Guide to Appraisals   Answering three common questions about appraisals to prepare sellers. Are you thinking about selling your home? If so, how exciting! This process means a fresh start and new beginnings. However, before you list your property, it is important that you completely understand appraisals. An appraisal is an opinion of value, where an expert appraiser will come to your house and estimate how much it is worth. They will provide a written report based on their inspection of pertinent information that determines your home’s value. This could greatly affect the success and price point of your sale, so it is crucial to be prepared. Here are three common appraisal questions and their answers: 1. What are appraisers looking for? They consider a wide variety of factors, like the floorplan, quality of construction, finishes, number of bedrooms, and square footage. They will compare your home to the listing to make sure the features are accurate. Also, they’ll take note of any upgrades that have been made to the house and if there were the proper permits for them, so make sure you have all of that in order beforehand. Last, they will be looking at comparable home sales in your area. “Make sure you have a professional on your side to guide you through your appraisal process.” 2. Why does an appraisal gap occur, and what should I do if it happens? Home prices are rising rapidly, which increases the likelihood of appraisal gaps. That happens when the value the appraiser provides is less than the agreed-upon price. There are several things you can do if this happens, so make sure you have a professional on your side to guide you through your options. 3. Should I get a pre-appraisal done? This is when sellers get an appraiser to look at their home before they list. I understand why people might think to do this, but I wouldn’t recommend it. First, the appraisal is normally seen as the buyer’s responsibility since it is typically a requirement for them to get a loan. Also, some lenders won’t even accept the appraisal you get because they’ll want it to be done by someone they deem as an impartial third party. Selling your home can be expensive, so you don’t want to pay for things that are unnecessary. Appraisals can be a confusing part of the process for many people, so don’t hesitate to ask me any questions that you have. Call or email me anytime; I am here to be your real estate resource. I look forward to helping you through the selling process!    Written by Ruby Miranda on March 2, 2023. Posted in Seller TipsTags: Sell Your Home Trackback from your site.   Leave a Reply

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Projects That Will Give You the Biggest ROI

Projects That Will Give You the Biggest ROI   Three home upgrades that will fetch you a high return on your investment. When preparing your house for sale, you may be led to believe that the more upgrades you make, the higher the price you can list for. However, not all home upgrades are created equal; some will have you pouring money down the drain, while others will get you immediate resale value. Understanding which projects to take on can help you make thousands of dollars more. So, what home improvements should you do if you want to get a fantastic return on your investment? To answer this question, we have to take into consideration the changes that happened in the past few years. Our homes were recently put through a massive re-evaluation. In response to the pandemic, there are now certain features in a home that have become much more attractive to buyers. If you can include them in your upgrades, you can increase the value of your house and turn it into a coveted property in the market. In particular, there are three projects you’ll want to take on: 1. Add more usable square footage. According to a 2020 survey by HomeLight, the need for more space was among the top reasons why people move. Projects such as creating a home office space, building an open floor plan, and finishing your basement can give you that additional space that buyers want nowadays.  The National Association of Home Builders (NAHB) identifies home offices as one of the new design trend interests in 2022. In addition, the NAHB found that 85% of buyers want an open layout between the kitchen area and the dining room. Lastly, finishing your basement can increase your ROI by 70%. “Understanding which projects to take on can help you make thousands of dollars more.” 2. Improve your curb appeal. One of the best ways to improve your home’s curb appeal is by focusing on your landscaping. Make your home look more enticing by adding healthy plants and blooming flowers to your yard. To make even more of a statement, slap a fresh coat of paint on your house’s exterior. However, not all changes have to be big and grand. Sometimes small details like updating your mailbox and house number will catch the attention of buyers. 3. Upgrade your outdoor space. Functional outdoor spaces such as a deck, a fireplace, or an outdoor kitchen are now more valued due to the pandemic. If your home has a nice exterior living area, buyers can imagine themselves enjoying the fresh air as they indulge in outdoor activities. If you already have an outdoor oasis, pressure wash or make repairs if necessary for a low-cost way to improve your home’s value. Home improvements can be expensive, so you want to make sure you’re investing in the right projects. If you’re not sure whether your renovation plans are worth pursuing, feel free to call or email me. I’m happy to give you real estate advice and help you get the best value for your home. Written by Ruby Miranda on February 17, 2023. Posted in Sell Your Home, Seller TipsTags: home improvements, home selling Trackback from your site. Leave a Reply  

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